Applying This To Elon Musk
The Physics of The Impossible
Musk and The Physics of The Possible
Musk has been on the trail through Hell so many times that he could be a tour guide.
electrified transportation is the future
Plug-In Drivers Not Missin' the Piston Electric vehicles are here to stay. Their market acceptance and growth will continue. Why?...
We had solar panels installed on our home in late 2007. That makes 2020 our 13th full year with solar panels on our roof. That's over 13 years quietly, dependably, making electricity to run our home. We started with a 4 kW system and then added another 8 kW in 2015.
In 2020, together these two systems generated 12,345 kWh. Yes, it was really 1-2-3-4-5. This brings our lifetime total to 94,137 kWh. At 14¢ that would be ~$13,000 worth of electricity. If these 94 MWhs were used to charge a Tesla Model 3 Standard Range Plus, it would be able to drive more than 600,000 km or nearly 16 times around Earth.
Here's a chart of our lifetime production:
If you look closely at the summer of 2020, you can see that the production flattens out faster than in previous years. That was due to the various fires that darkened our skies. It's ironic that the fires are made worse by global warming and they are reducing our solar production. A vicious feedback cycle.
2020 ended with our Powerwall installation on New Year's Eve.
If you are interested in a Tesla solar glass roof or their solar subscription program, you can use my referral link and after activation, you'll get $100 of free solar energy.
[12.22.2015] “We’re going to end up with complete autonomy, and I think we will have complete autonomy in approximately two years.”
[10.19.2016] Discussing the new Autopilot hardware, Musk said, "It is fully capable of Level 5 autonomy, a big step forward." *Note the work 'capable' verses something like 'functional.'
[06.12.2018] Tesla’s cars will in August suddenly activate “full self-driving features,” the company's chief executive Elon Musk tweeted on Sunday. "Features" meaning some subset of "Full."
[10.21.2019] "Next year for sure, we will have over a million robotaxis on the road"
[07.09.2020] "I remain confident that we will have the basic functionality for level five autonomy complete this year." Where "basic functionallity" is again a subset of "full".
[01.28.2021] "Basically, I'm highly confident the car will drive itself with reliability in excess of a human this year. ...we need to probably do a little bit more work to prove that Tesla Autopilot is capable of full self-driving, which, I think, will become obvious later this year."
As you can see, in statement after statement, Musk had high confidence that FSD-Level 5 will happen soon (where "soon" is any time 2017 or later). I submit to you that all forward-looking statements about something that's never been done before should be taken with a grain of salt. Additionally, these statements are often made under a Safe Habor Clause that provides legal protection for optimistic speculation. Careful parsing allows you to find the caveats (e.g., 'I think', capable, features, basic...), that a quick enthusiastic read (or an intentionally malicious misread) will miss. If you want a vehicle to drive you from A to B tomorrow, I suggest that you take the train, a bus, use Lyft, or hire a chauffeur rather than buy FSD.
If you want a car that can drive you around right now, while you look at your phone, FSD is not it. Take a Lyft instead.
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Downed trees in Oregon Photo Credit: Wade Radcliffe |
Our Powerwalls were installed on December 31st, 2020. Just six weeks later, we've had our first power outage. This was our chance to see how well they perform.
There's an ice storm in the area. Freezing rain has glazed over the bare winter branches in our yard. Storm Watch is enabled and the Powerwalls are charged to 100%. Over 250,000 homes in the state have been hit with power outages. Some have been without power for 48 hours as I write this.
On the evening of Valentine's Day, our neighborhood joined many others in the darkness. The streetlights went out. Looking up and down the block, the houses were dark, with the exception of ours.
The power had been out for about 5 minutes before we even noticed. We didn't notice because, in our house, things had continued normally. The Powerwalls had taken over and they were running everything. The lights were still on, TV was on, the internet was even still working, and the washing machine was running.
We had no idea how long the power would be out. The sun had set for the day; we were not going to have any solar support. With grid out and no solar, it was all up to the Powerwalls.
The first thing I did was run around the house turning off and unplugging nonessentials. As I mentioned above, the washing machine was running. It was in the final spin cycle, so we opted to let it finish the run. This was one nice benefit to having Powerwalls. If we didn't have them, the washing machine would have been stopped mid-cycle. This could have left us with soaking wet soapy clothes. Once the washing machine finished, our consumption rate dropped.
I collected data periodically for the charge level of the Powerwalls during the outage. You can see it in the graph below:
The combustion engine was once the machine that made the automakers profitable companies, now it is the anchor around their necks, anchoring them to the past, preventing them from driving into the electric future. It is the ICEberg into which many will crash.
Bloomberg recently reported that EVs are about to cross the tipping point where their initial price will be lower than similar class gas-powered cars. This (combined with the lower running costs and smoother, quieter ride) will mean that the majority of new car sales will quickly transition to electric during this decade. Once a tipping point is reached, the world changes quickly; companies that are caught on their heels could miss out and join the ranks of those that dominated one era but fell into obscurity after a transition.
Despite the evidence of this upcoming sea change, many of the largest automakers are bound and determined to ignore or downplay the looming change. Even when they acknowledge the importance to embrace the future, as VW's Chief Executive Herbert Diess has, the company culture makes it nearly impossible to change.
Let's look at two of the biggest automakers and see how they are dealing with this: Toyota, in denial; and VW, in culture shock.
At Toyota's recent annual meeting, the company's CEO, Akio Toyoda, went on an anti-EV rant. As the Wall Street Journal reported, the things Toyoda said included claims that EVs were more polluting than gasoline-powered vehicles. This "longtail argument" has repeatedly been proven false by several credible studies.
Toyoda claimed that EVs are too expensive and that government EV mandates will price people out of new cars. It's true today that you cannot buy a sub $20k car with 300 miles of range, but that will not remain the case. Batteries have recently dropped below the $100 per kWh mark and they are continuing to decline, and when fueling and maintenance cost factors are included, EVs are already more affordable to own in many categories.
Toyoda's attitude has permeated the company and it shows in their marketing campaigns as well. See the ad to the right that bashes on EV recharging times. This ignores the fact that most charging happens overnight while you sleep. You wake up each morning with a 'full tank.' It also ignores the fact that on-the-go DC fast charging has gone from 50kW (CHAdeMO v1), to 120kW, to 270kW, to 350kW (CCS 1,000V) over the last decade. So today, you can recharge significantly faster than you could a decade ago.As batteries chemistries continue to become more hearty and packs continue to get bigger, they'll become capable of even faster charging. Again, Toyoda seems to be willfully ignorant of this trend or intentionally spreading anti-EV information.
Instead of talking about the convenience of charging at home or the environmental benefits of charging from an ever-greening grid (or even solar from your own roof), Toyota is putting out deceptive ads about “Self Charging” hybrids.
This is a major inflection point in the auto industry. Toyota has been innovative in the past, but they are not currently displaying this innovative capability. Rather than trying to surf this EV wave, they are trying to hold back the tide. They should ask Kodak and Blockbuster how well that strategy worked.
VW is in a different place than Toyota. VW's Chief Executive, Herbert Diess, wants to go all-in on EVs. His efforts to reform the company have met with resistance from many levels within the company and in their dealership ranks. Even after the shameful events of Dieselgate, many within VW fight to retain their fossil fuel ways. Diess, frustrated with this resistance, demanded a vote of confidence in his leadership. He asked the board to let him lead the company into the future or send him packing.
Powerful directors of various units within the company don't want to see VW change over to an EV company because it could mean the end of their department. EVs are fundamentally simpler machines than internal combustion systems. There are no pistons, no intake valves, no spark plugs, no crankshafts, no gearbox, no oil pan, no exhaust system, no catalytic converter; often there's no transmission... each of these are fiefdoms within the company and when you think your career is tied to a department, you'll fight to keep that department alive regardless of the CEO's vision. Other than the paint department, no one is safe.
Speaking of jobs, VW's workers are mostly union employees. The union does not want to see layoffs and salary reductions. However, if the company is going to reinvent itself, that's going to mean rebuilding the company, which includes writing off stranded assets. All of this will be expensive. The company will have several years of little to no profitability as they transform. These lean years will mean fights with the union over jobs and wages. It will also mean unhappy shareholders. If you bought VW stock for its dividend payout, then you've already been disappointed when it dropped from 6.50 euros to 4.80 euros. We don't know what the future will hold, but I'm willing to bet that the dividend will continue on this downward trend as they have to build new factories or retool old ones for battery pack and electric motor production; as they have to pay severance packages; as they have to buy companies with the software skills for a modern computer-on-wheels car company.
Let's not forget about VW's dealers. VW's marketing has been heavily advertising their ID.3 EV, talking about how battery-powered cars fight against climate change, and how VW is a pioneer in the drive to saying goodbye to Diesel and gasoline. Greenpeace Germany wanted to see if the dealerships reflected this messaging, so they sent secret-shoppers into dealerships around the country to see what the salespeople were saying. They visited 50 dealerships. Greenpeace found that if the secret shopper said they were interested in an EV, only eight dealers recommended the ID.3. If the secret shopper didn't mention EVs, then only 2 dealers even suggested the ID.3 as something that the shopper should consider. Despite being independently owned, dealerships and the salespeople that work there are the face of the company. If you want to buy a VW, you go to a VW dealership and talk to these salespeople. If they are not promoting EVs, even to customers that come in asking about EVs, then sales of VW's EV line will suffer. VW has a good EV in the ID.3, yet 84% of dealers did not recommend the car, even when shoppers asked about EVs.
VW is not the first automaker to encounter EV resistance at their dealerships. Dealerships are independently owned. They are not required to toe the company line. Much like the fiefdoms within a company, they act in their own best interest. Dealerships make most of their profits from service rather than sales. Sales can even be a loss leader for service. EVs, however, don't require much service relative to their ICE counterparts. In an EV, there are no spark plugs to change, no fuel filters, no oil changes... All resulting in few service visits and less service revenue. If EVs are not profitable for dealerships, they are more likely to steer people to the gas-powered cars that are profitable for them.
Given this, the dealership salespeople are far more likely to repeat the anti-EV FUD that's circulated by groups with a vested interest in maintaining the fossil-fueled status quo. And this is exactly what the Greenpeace study found. When secret shoppers asked questions about EVs, nearly half of the answers were, at best, an ignorant “I don't know,” or at worse misinformation. Several salespeople volunteered various fearmongering myths about EVs to discourage shoppers from buying them.
Volkswagen is an 83-year-old automaker. They have a deep-set culture. A culture of making Diesel and gasoline cars; a culture where dealerships have an expectation for cars that need service; a culture where investors expect dividends; a culture where directors and vice presidents expect their departments to grow and thrive (or at least survive).
Turning this behemoth into a modern high tech company will not be an easy feat. It's a culture problem. This is far more difficult to deal with than a technological problem. Every time the company promotes EVs as zero-emission or as better for the environment, it's an admission that their other products are pollution emitting and bad for the planet. They have products that some people at the company have spent their entire career developing, refining, honing. Being asked to recast that legacy as polluting and harmful is a pill too big for some to swallow. Some people within the company might see this as spitting on the sum total of the company history and all of their work for a current "fad" that "won't work" long term.
At the start of this VW section, I said that Diess called for a vote of confidence in his leadership. The board sided with Diess and he currently has their backing for “rigorously pressing forward with the largest transformation in the history of Volkswagen.” Diess went on to say: “In the upcoming years, we will continue to invest in electromobility, digitalization, and battery technology. At the same time, substantially reduce fixed costs and material costs throughout the Group in all brands and regions in order to ensure Volkswagen’s future viability.” We'll see if Diess can overcome the massive inertia within the company and dealerships.
Disruption is not common in the auto industry, but it is common in the high-tech world. Maybe automakers can look there for some examples of coping methods. In the last few decades, Microsoft has reinvented or augmented itself several times. In the early 1990s, they were an operating system and office applications company (and they were ignoring the internet). Then in May of 1995, Bill Gates sent his famous “Internet Tidal Wave” company memo. In it, he said, “I want to make clear that our focus on the Internet is crucial to every part of our business.” He went on to explain that they would not have an “Internet division”; instead, Gates expected every one of the company's products to embrace the internet. Later in 2001, Microsoft again added a new direction for the company with the Xbox gaming console. Then in 2010, they expanded into enterprise cloud with Microsoft Azure. Oh, and don't forget their failed phone efforts. This phone effort shows that you don't have to win them all, but the effort itself (win or lose) is a sign that they are not just complacently resting on their laurels.
When you are in an industry that has a major disruption every decade or so, then when the next one comes along, you have leadership and employees within the company that dealt with the last one. There's a collective memory, there are toned organizational muscles ready for the fight. The auto industry has no such history, but perhaps they can learn from the industries that have this skill. For example, just as Gates did with his Tidal Wave memo, Diess could author an “Electric Vehicle Tidal Wave” memo to all of VW Group. The memo would set company-wide expectations that all departments are to be EV departments. All employee/executive bonuses would be tied to the company's EV sales growth. Similarly, there are ways that dealerships can have their incentives aligned to the parent company's EV goals.
Anyone that is not on board with this new company direction would be offered a severance package. This will be better for both the company and the employee in the long run. Long term, an employee would not be happy working someplace that they think is 'going the wrong way' and the company would be better off without people that want to anchor them to their ICE past. VW needs everyone rowing in the same direction.
A company's culture has been called its immune system. There are behaviors common in some companies that would not be tolerated in others and this is a function of their different cultures, leadership, and history. This immune system can also attack new ideas as if they were foreign invaders unless they are properly introduced into the culture.
Changing a company's culture is one of the most daunting leadership challenges. A company’s culture is not just one thing. It's how they communicate, their roles, goals, processes, shared values, practices, rituals, assumptions... all blended together in an interlocking system.
Unless a company has a highly adaptive culture, it is unlikely that the culture will change significantly unless there is a serious shock to the system. The company has to collectively believe that the very existence of the company is at stake or else there's no motivation to do anything other than that which has worked in the past. This means that successful companies are often the ones that are most culturally ossified. This then means they are the ones least likely to adapt to market disruptions.
Success leads to complacency. Complacency leads to cultural ossification. This leads to an inability to adapt. Inability to adapt leads to extinction when things change. In the auto industry, things have just changed.
From the title, you might have assumed that this post would advocate for Tesla to end OTA updates. That's not the case, far from it. Rather, this post focuses on other policies that might make people think twice about trading in their current Tesla vehicle for a new one.
Over the years, Tesla has had many offerings that are no longer available such as free Supercharging for life and free premium connectivity. If you have a car that has one of these features, you cannot buy a new car with the same benefits. If this is a feature that you use and like, you might think twice about buying a new Tesla without it.
Similarly, if you have paid for Full Self Driving (FSD) on your current vehicle, this does not carry forward to your next Tesla. You'd have to pay for it again if you wanted to upgrade to a newer Tesla vehicle and the price of FSD may have increased. The current $10,000 price tag makes this a non-trivial payment.
The last two to consider are the performance boost and range boost. In some of Tesla's vehicles, you can pay to reduce you zero to 60 time or increase your range. These two are a little more complicated in that they are not universally supported, so they may not be offered on a new vehicle that you are considering.
On the plus side, all of these items (free Supercharging for life, free premium connectivity, FSD, speed boost, range boost) should help increase the resale/trade-in value of your old car, but that's only a small consolation. It's really nice to take a road trip and know that you won't have a 'fuel' bill waiting for you when you get home. It's nice to stream Netflix and get live traffic information without a monthly connectivity bill.
Let's look at the two examples in our garage. First, a 2016 Model X. This is an AP1 car with free lifetime Supercharging. I admit that I don't Supercharge all that often. Most days, charging happens overnight in our garage, but we have taken several summertime family road trips and the Supercharger network makes that pretty easy to do up and down the west coast. Carefree traveling on the Supercharger network is priceless.
Next, is our 2018 Model 3. This car has FSD and free premium connectivity.
We are considering buying a Model Y, but with the current policies, we would not be able to get free Supercharging, free premium connectivity, or FSD (without paying for it again). This makes some aspects of buying a new Tesla feel like a downgrade. I understand why Tesla changed these policies; 'free' can incentivize the wrong behavior. It can create a 'tragedy of the commons,' some people become irrational about it and would even avoid the convenience of charging up in their own garage just to use the free Supercharging... So maybe there's a compromise.
When you trade-in a vehicle with free lifetime Supercharging or lifetime premium data, Tesla could offer 2 or 3 years of the feature for free in your new vehicle. This is not exactly, the same, but it would ease the transition and perhaps I would not cling so hard to our older vehicles that have something that we cannot include in a new purchase.
Another option is a transfer option (for a reasonable fee). If you want to keep a given feature, you'd be able to transfer it to your next Tesla. This would be a nice way to acknowledge the support that early adopters showed to Tesla, while still allowing them to upgrade without losing a feature to which they've grown accustomed. Tesla is able to collect data about how much these features are being used and could price the transfer accordingly.
As for FSD, it would be really nice if you could transfer this from an old vehicle to a new vehicle. I understand that Tesla makes more money if they sell it with every car, but I'm not sure this helps them overall if I and others avoid buying a new car from Tesla because the price of FSD has gone up and I don't want to pay for it a second or third time.
Elon Musk was asked about the ability to transfer FSD in the 2020 Financial Results call. He clearly stated that they have No Plans to allow transfers. Instead, they will offer a subscription option for FSD. The FSD subscription details will be coming out soon, so (as I write this) we don't know how much it will cost. Depending on the price, this may work out for people purchasing new vehicles, but what about the hundreds of thousands of cars that are currently on the road? They would continue to have a policy that dissuades some people (like me) from buying a new Tesla.
I hope Musk and Tesla reconsider and take some action to remove these hindrances to new vehicle purchase upgrades. The new Model X is very tempting. Stalks are so 2020 ☺
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Disclosure: I'm long Tesla stock
http://ts.la/patrick7819